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Closing Bell With Maria Bartiromo

News/Business. Maria Bartiromo. Analysis of the day's winners and losers in the stock market. New.

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01:00:00

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Us 14, S&p 9, Washington 8, U.s. 6, United States 6, America 4, John Harwood 4, Apple 3, John 3, Mitch Mcconnell 3, Sandy 2, T. Rowe 2, Eamon Javers 2, Rick Santelli 2, Dnc 2, John Mccain 2, Mandy 2, Europe 2, John Yarmuth 2, Scottrade 2,
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  CNBC    Closing Bell With Maria Bartiromo    News/Business. Maria Bartiromo. Analysis of the  
   day's winners and losers in the stock market. New.  

    December 31, 2012
    4:00 - 5:00pm EST  

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deadline for avoiding these consequences, it's not going to be met. i still believe that a deal will ultimately be struck and approve relatively quickly. but it is not going to be proved according to republican leadership sources in the house. it's not going to be done tonight. >> well, it's too important to do it on such a quick basis, i think. so maybe that's a prudent thing to do. thanks, john. >> see you later. >> well, we're about to close the books on 2012. it's been a good year, better than i think most would have expected given all the turbulence this year economically and politically. the dow's finishing up about 150 points right now capping off a year with the dow up about 6%. that's the first hour of the "closing bell." let's go into 2013 with the second hour right now.
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it's 4:00 p.m. on wall street. welcome back to the "closing bell." some very important headlines coming out of washington as we speak. you just heard, by the way, the very last closing bell of 2012. coming up in the next hour, we're going to break it down for you. help you use that knowledge to navigate well in 2013. here are the near-final figure y figures. one trader said to me we were lower friday because nobody wanted to go into the weekend long the market. now nobody wants to go short the market tonight in case they're able to get this deal done and vote on it in the next couple days. the dow at 13,106.98 to close out. the s&p up today. and a strong day for the nasdaq. up 2% right now at 3,019. >> certainly the market didn't seem to be particularly deterred
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by the news that john harwood just broke there, the fact it looks like no vote in the house tonight. which would mean technically we'd go over the cliff. but he still thinks a deal will be struck but just not tonight. 2012, check. it's in the books at least for the markets, that is. and while the clock keeps on ticking, no deal yet. what is an investor to do in the new year? >> edward pangin with us, james buckingham, rick santelli. everybody on board to pick apart what has just happened and what may happen going into the new year. what do you think? are you hopeful to get a deal? do you want to buy stocks at this point what do you think? >> thanks for having me on. i think we're getting some closure on the fiscal cliff. but we want to look behind the scenes. earning estimates for the s&p 500 and the broader market.
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over the last tlie months you see negative pressure on earnings. that's led by energy sector and stocks. ex-financials. and what's also giving us a bit of pause heading into 2013 is the fact that these expectations are calling for about a 7% increase in earnings for next year which may not seem heroic on the surface, but it is a reacceleration from the 5% that we're going to post most likely in 2012. >> you have to think about fundamentals then. >> yeah. i'm worried a bit about that and the fact we're probably going to see a reset in earnings estimates in the next three or four weeks. because these negotiations, we're going to get some closure and resolution. it's still going to be a 1%, 1.5% fiscal drag. that's going to be an impact on earnings heading into 2013. >> rick santelli, what do you
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make of the reporting that john harwood just came out with a moment ago? what do you think that means? >> well, i found it a little bit curious. because here we are with mitch mcconnell and the vice president trying to work this out from a senate perspective. and the story is the house isn't going to vote for it. i'd like to back up a square on this game board. the senate hasn't voted for it yet. >> uh-huh. >> so i don't know. i think the negotiations are going on between a couple individuals. to throw this out in the full senate for a vote much less the house has a whiff of plan "b" and boehner on it. i think it may still get worked out in the band-aid form, but i don't think that's complete at this point. so i think maybe we're all going to be working tomorrow. >> i'm just getting word now that the house gop is going to caucus in an hour. they may not vote, but they'll be talking about what they're hearing coming from the senate and probably get more details at
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that point. it's not like we're not going to get any progress. but as i said before, rick, for something this important, would you want this to be that much of a rush job in. >> i agree with you. i totally absolutely agree with you. that it needs to be taken time. my reservation all day that i kept mum was is the house going to get this at ten minutes to midnight? i think those guys have some responsibility to do the job a little differently than the health care plan. i don't think they want to find out what's in it after they vote on it. >> without stating the obvious, it would be nice they took their time before the deadline opposed to after it. but i'm going to leave that alone. i want to get to you, john. because i would really like to know whether or not the market is just relieved that it looks like a deal is going to get done. the market hates uncertainty. what is going to happen once that uncertainty is taken away? does it matter what the deal looks like? >> well, certainly that's important, but really getting rid of some of this uncertainty as you mentioned is the
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important thing. you know, corporations, i know we're talking about, you know, earning estimates coming down. but corporations have a tough time planning when you don't know what the tax rules are going to be and you don't know what the health of the consumer is going to be. getting this behind us is key. and i do think that equities would be able to have a solid year in 2013 once we get rid of some of this mess that we're in. >> what about ed's point to the fundamentals and the slowdown in earnings? >> well, we still are expecting earnings to rise next year. and again, i'm of the camp that so many investors are rarely pessimistic. many have been positioned negatively -- >> john -- john, i'm sorry to cut you off there but we've just got breaking news out of washington. let's get back to john harwood. >> i talked to an aide that said house gop caucus meeting is not principally about the fiscal
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cliff. it's mostly going to be about sandy relief money from the superstorm. the cliff will come up, but the source said we are not going over any potential deal because there isn't one and the senate hasn't acted yet. >> but even if they're intending to talk more about sandy relief, don't you think the fiscal cliff issue is going to kind of come up? >> of course it's going to come up, but my only point is the meeting -- that's not what the meeting is about. it's a further indication that -- from the house of representatives that they don't consider this thing ripe enough that they're going to bolt and move on it tonight. >> that'll please new jersey governor chris christie and governor cuomo of new york. but you don't think that's a head fake to try and lower expectations? or not to raise them needlessly on the fiscal cliff? >> look. >> we sound skeptical, don't we? >> yes. but we're not that far from 5:00. and we're not that far from midnight. knowing the way the senate acts, the fact the senate leaders have not announced a deal.
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i don't think it's a trech to say that the house at this point is standing back and saying we haven't moved the ball yet. >> understood. >> okay. >> we'll get back to you shortly, i'm sure. there'll be more coming out of washington. in the meantime, we just closed out the trading year for 2012. as the dust settles, courtney reagan now breaks down what was i would say among the developed markets a pretty good year for stocks. >> not that bad. lots of green. we're ending on a high note today. all three indexes closing up today and for 2012. the nasdaq the biggest winner. up almost 16%. the s&p notches a 13.4% gain. and the dow up 7.3% for 2012. when it comes to the blue chips, there was some flip-flopping going on. the biggest gainer last year, the biggest dog of the dow. bank of america. doubled in price this year as the bank improved its financial footing. home depot and disney all saw
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strong earnings. consumers proved resilient in 2012. jpmorgan another of last year's dogs round out the top five with all big double digit percentage increases. if you look at the numbers, bank of america up a whopping 108%. home depot up 46%. now, hewlett-packard, the dow's second biggest loser in 2011 is this year's worst performer ending the year at a ten-year low down about 45%. after its ceo and accounting scandals. intel struggling with the slowdown in pcs. shares down about 15%. and last year's best dow performer mcdonald's posting a double digit loss this year. dupont and caterpillar round out the top five of losses.
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>> thank you. when we come back, we've got some wild predictions for technology in the new year. how about facebook buying netflix? how about microsoft taking over research in motion? and wait until you hear what experts are saying about apple. and what are the best bets for the market in the new year? three of wall street's investing pros give you their best ideas the the back half of the show. you cannot afford to miss them. >> also we'll get the view from top lawmakers. we have representative barrasso and yarmouth. along with our own maria bartiromo on the fiscal cliff. stay tuned. you're watching cnbc the first in business worldwide.
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well, it's crunch time. the president says a deal is close but not done. we've heard the same from mitch mcconnell. then the president threw in this monkey wrench this afternoon. >> if republicans think that i will finish the job of deficit reduction through spending cuts alone without asking also equivalent sacrifice from millionaires or companies with a
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lot of lobbyists, et cetera, if they think that's going to be the formula for how to solve this thing, they've got another thing coming. >> let's get some reaction now with senate john barrasso. have asked vice president biden to come to capitol hill to sell the deal to democratic lawmakers. what do you make of that headline? >> i know the republicans are going to meet at 4:30 this afternoon. all the republicans in the senate to go over the proposal. it sounds like the democrats are as well. but the democrats have been very divided over the level for raising taxes, over how to tax small businesses which are the job makers in this country, as well as the death tax which hits so many small businesses and farms and ranches and job creators. so the democrats are divided. we're going to meet at 4:30 to go over the specifics of the
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agreement to see if it's something that we will vote for. >> how are you on the republican side? are you divided on this tax issue they've agreed apparently to an income tax increase to 39.6% on individuals making $400,000 and $450,000 for couples. >> we're united in wanting to make sure any increase in tax revenue specifically goes to dealing with the debt and the deficit and is not used on additional programs. i mean, the president seems to underplay the magnitude of the mess we are in financially with our debt. $16 trillion debt and yet he only wants to raise taxes and spend it for more additional programs rather than address the fundamental problems. >> as you know, they're talking about a delay of the sequestration cuts. the republicans have said they want as much as three months. the democrats want longer. maybe as long as a year.
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what would be acceptable to you and your colleagues in the senate? >> well, as i said, we're going to meet, all the republicans are going to meet at 4:30 this afternoon in ten or fifteen minutes to go over all of the specific details, what the tradeoffs are and to make sure any increase in revenue is applied to dealing with the debt and the deficit and not for spending on new programs. >> do you think that -- mandy, do you have a question? go ahead. >> no, no. go ahead. >> do you think you're going to have a bill that can make it through the house? where they're much more resistant to raising taxes? >> well,ic that the president's comments a little earlier this afternoon made that actually tougher. the president should at this time be working with the house and the senate. he's the only one who can sign it with the pen. and he needs something that can pass a republican-controlled house and a democrat-controlled senate. i think the president ought to try to get that passed and signed before he goes after the
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republicans in the house again. >> thank you very much for speaking with us, sir. >> thank you. >> thanks for having me. all right. now we've got maria bartiromo on the phone. she's been talking to lawmakers. she can never rest on vacation. she has the latest on what she's hearing on the fiscal cliff negotiations. what you got, m? >> hi there. thanks much. i've been on the phone all day with a number of house republicans and senators. and what i'm hearing is that the president's press conference made this bill a much tougher sell in the house. at this point, yes they are meeting at 5:00 p.m., that gop conference. but it's not about anything fiscal cliff related as you heard from john harwood. basically thes gop expected that even though they were reluctant to agree to any tax increases, they were going back to their constituents and saying we are agreeing to taxes going up on
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anyone making $450,000 or higher and they expected that the tax conversation would be done for 2012 and that they would begin going into 2013 with the conversation over spending cuts. however, that press conference where he basically said it's not going to be on the backs of seniors and we need more revenue suggested that the president is going to seek loopholes closed, exemptions closed in the tax code and possibly further tax increases for more revenue. and my sources are telling me that that changed the outlook and the conversation. that the house believed this was the end of the tax debate. they would move to the spending cuts in the new year. now he says he wants more taxes. they say why would we give on that knowing the president is going to be pushing for higher taxes. how will we explain that. the house is not likely to vote on anything related to the fiscal cliff tonight. obviously we are going over the fiscal cliff. we go over regardless.
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the main point here is that this bill did not solve anything as far as the debt is concerned. you know, the democrats have said to me today look, we've already put cuts in. now, yes, they agreed to spending cuts in 2011 as you know over a ten-year period. but those cuts have not occurred yet. these are cuts over ten years that really very few people believe will actually happen. there are also cuts of projected increases. so so far we haven't seen any cuts to spending. we're only seeing expectations and conversations of cuts of projected increases in spending. >> right. >> it certainly feels we've got a way to go. >> that's where the republicans have the leverage, the debt ceiling. >> exactly. >> and this is going to be another fight over and over again. >> what we heard from mitch mcconnell earlier today was let's get a vote on the tax portion of this agreement and then they can worry about the spending cuts. and i think it's all pretty clear that they're waiting for
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that debt ceiling limit to be hit in march. that's why they want the delay of the sequestration until that time. that that's when they can talk about meaningful cuts at that time. don't you agree? >> absolutely, bill. but the problem is then the president came out in that press conference and suggested that during that conversation around the debt ceiling, he is going to seek even higher taxes or certainly higher revenue from changes in the tax code. and that's what apparently according to my sources infuriated certain republicans. and they basically said why would i agree to this when this is only the beginning of more talk of higher taxes to support further spending going forward? and that's really what turned many people off, and they said no vote tonight. we go over the cliff and we'll have to deal with this alongside the debt ceiling debate. which makes everything more difficult for the economy and the markets. what i'm surprised about, bill, is that we are not hearing more of a upset from the democrats
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and not demanding that the sequestration be undone. so now you've got everything happening as we expected on the fiscal cliff. the sequestration, the spending cuts, and the tax increases. which as we know will lead to a recession in 2013 likely. >> okay. we got to leave it there. >> all right. thank you. good job. happy new year. i don't know if this means you won the bet or not. i can't decide. what's that? >> i think i won the bet. i didn't want to win the bet. >> wooe'll talk. happy new year, kid. keep it here for the latest on the cliff developments. we're not done with this yet. america's economy held hostage gips at 6:00 p.m. eastern time tonight. >> indeed it does. also insiders view now it is a fact we are going over the cliff. what does it mean when we start trading on wednesday? when we come back, a couple
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of technology pros gaze into their crystal balls this new year's eve. one of them thinks facebook will buy netflix and microfox will take over research in motion. oh, yeah? we'll talk about that coming up. [ male announcer ] at scottrade,
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nearly 6% this year. another 2% today. now looking at some of the top tech performers in 2012. global travel company, expedia.com. recently announced they're growing in europe. seagate technology has a 5% dividend and a plan to cut the number of outstanding shares. and ebay could well be positioned to take advantage of the trend. now apple, despite a tough quarter, the launches of the iphone 5 and the ipad mini helped them return over 30% this year. though it's been a tough three months. it wasn't all positive in tech for everyone. marvel technology group down. the chip company hurt by a ruling against them in a lawsuit. hewlett-packard hurt. most recently because of possible accounting issues. and dell hurt by a pc industry
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that has well passed its prime. they've been looking to more of a services driven business. the biggest ipos of the year didn't turn out as spectacularly. facebook shares went down to 26.60 today. >> love that. thank you. the nasdaq did better than the dow in 2012 and even better than the s&p 500. so now let's get tech predictions for next year and hold on to your hats, guys. because they range from microsoft taking over rim to twitter going public. great predictions out there. max wolfe is chief economist at green crest capital. larry is coo at dinah link. let's get to you first. you have a prediction and it involves apple. >> yeah. i think that apple's going to continue to lose market share in the tablet space. but they're going to ship more units nonetheless.
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i think we're going to see this whole space get competitive. i think we'll see the big guys in google, microsoft, obviously apple, also facebook try to wall their gardens. keep folks inside. offer a suite of services. but apple is going to face more competition from modzilla and big guys. we'll also see video go the way of picture sharing and music inside the wall garden as the big fight for dominance to control your social consumer. >> max, great minds think alike. this is the same prediction i gave for 2013. i'm not an analyst, i do things on a hunch. but what does that mean for apple stock? >> i think it means that apple stock has a good first quarter as people sort of breathe a sigh of relief that the mini does well. i'm not sure as good as some folks say. but they're going to have about two quarters to show us something exciting and new. the ipad mini and iphone 5 are
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me too products. they were kind of samsung products first. so google has six months to show them something astonishing. it was a bit overbought going into october. >> okay. larry. i have two blackberries sitting in front of me. you think that rim's trivials will not change. >> i think they buy him as a take under. there's a few things that could happen here with rim. they could come out and get a big pop where everybody thinks they're doing good. >> when the blackberry 10 comes out. >> but i don't believe that will happen. even if it does, they continue to burn cash. they don't have cross platform utilization. if that does happen, it's in the 15 to 17 range. i don't think that will happen. otherwise you'll get an asset sale. i think microsoft will come in for the patents, enterprise user software, and the users to
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continue to roll it under them and grow. >> so you don't see rim as an ongoing concern continuing in its current form. >> i think rim in its current form is dead. >> wow. that's a strong prediction. i want to throw in another of my predictions. microsoft will lose relevance because it's fighting too many losing battles in too many sectors. do you think getting rim under its stable is going to be able to help it in any way and help it become an innovator again? is it anything to turn around the fortunes to the better? >> well, here's the thing with microsoft and i own their stock, right now the surface isn't doing that great and the windows 8 isn't doing that great. but they have the huge enterprise business out there. so if they take that enterprise business and roll under rim and the patents -- the patents are key right now. we see apple and google right now for kodak. they're fighting for the patents. so you have the content apps and mobile on one side of the game. then you have the enterprise and cloud space.
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that's where microsoft's niche is. and i think it's going to be a great year for them in 2013. >> hopefully it will be a better year than it has been in 2012. to both of you, thank you very much for joining us today. >> thank you. >> see you later. now, if you could invest in only one stock in the new year, where would you put that money? three of wall street's market pros will share their best investment ideas for 2013 when we come back. then later on, we're going to go over the cliff tonight. yeah, many people said it would happen. many said it wouldn't. but it is. our john harwood reporting there will not be a vote tonight. so it's happening now. now what? a key congressman is going to weigh in. stick around. ♪
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markets ended, investors have locked in nar gains and they losses for the year. the s&p 500 had a 13% increase. last year it was a 0% increase. end of the year where it started. the dow gained 7%. and the nasdaq was the clear percentage winner jumping nearly 16% over the course of this year. >> so what will be the best bet for investors in 2013 taking you through their iidua visions. he's the ceo of asset
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management. and our own senior economics report steve leisman join us with their predictions here. david, start with you. what are you looking at? especially bear in mind we're going to be still feeling the effects of the fiscal cliff and technically we're going over it tonight. does this affect your thoughts of investing in 2013? >> absolutely it does, bill. and it has the last two months. we've seen a marked retreat from u.s.-based investments after u.s. centric holdings, the s&p 500 showing strong leadership in the first ten months of the year. what we've reason seen is now foreign markets picking up the slack. so i would say when we look into 2013, the opportunities most likely exist outside the united states, not in the u.s. >> outside of the united states is a large geographic area. can you narrow it down for us? like asia, europe, emerging frontier, what is it? >> of course, mandy. and that's part of the asset
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selection you have to do. for us one of the best areas we've seen has been in emerging market debt. it started out many years ago with the bricks and recently we've moved in the last five or six years to the n-11. by looking at those markets where we can have sovereign debt and corporate debt and relying on a good fund like the fidelity emerger. >> peter, i'm interested in what is going to be the key driver of the markets overall. i'm kind of sick of politics being the driver. right? because it means we're not driven by fundamentals. we're being driven by the bickering out of washington. what will it be in 2013? >> if people understood the fundamentals, it would be a different story. i think the fact so many people are still confused about what the fundamentals are, we're in terrible shape in the united states. so the message we are sending to the world with negotiations to
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avoid the fiscal cliff is we're never going to address the fundamental problem. we're not going to stop the spending. we're not going to stop the debts. the fed's going to keep on monetizing the debts until we have a currency crisis. that's the bottom line. we're going to have to be forced to act responsibly. if the dollar is going to come down, it could come down a lot. that's another tail wind for investing abroad. i agree with your guests. i like the action particularly in the last couple months. and allowed the southeast asian markets. we've been investing in places like indonesia and mexico. those are the exotic locations. but you've got to get out of sus dollars. >> peter, why would you invest in the country whose terms of trades are getting worse rather than in the united states with a depreciating dollar and terms of trade are improving? >> a weakening dollar doesn't improve your terms of trade. >> sure it does. that's exactly what it does. >> no it doesn't. >> it helps exports.
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>> steve, the dollar has been depreciated -- >> it costs less to make stuff here. it's not been depreciating for decades. >> yes it has. where you been? >> i been here. >> do you see a significant depreciation of the u.s. dollar? >> i don't. i think what's interesting is that if you weren't paying attention, the dollar is the world's reserve currency. all the things that have gone wrong here in the united states have put people into what? into dollars. into dollar-based assets. the ability to fund the deficit goes on without much hiccup at all. we're still paying low rates for borrowing. 1.7%. all those predictions were -- >> they were playing ridiculously low rates in greece too. it's a dollar bubble. it's a treasury bond bubble. will it burst in 2013? maybe. it's going to burst eventually. it has to burst. >> peter, it's not a model. it's not a model to say
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something bad will happen eventually. >> your model about being a pollyanna and having your head in the sand -- >> it's not. >> how did you miss the financial crisis? >> i have no idea what you're talking about, peter. i have no idea what you're talking about. i was one of the first reporters to report on the housing and the mortgage crisis. i'll show you the clips. >> you were one of the guys laughing on me when i was report -- >> like a lot of what you say is ridiculous. >> guys, guys. [ overlapping speakers ] >> time-out. >> something bad will happen eventually, peter. >> time-out guys. i have a question for you peter. you're predicting currency crisis and significant depreciation of the u.s. dollar. what is the money going to? what is a good alternative currency? >> there is no good alternative. gold is the best alternative
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because none of these currencies are any good. but certainly compared to the dollar, other currencies are not nearly as bad. and the world does not come down to the dollar or the euro or the yen. there are a lot of other currencies out there where the central banks are not being as reckless. >> australian dollar for one. >> i own the canadian dollar. i used to call it the canadian peso. but i'd rather own canadian dollars than u.s. dollars. that's how bad it's become in this country where canada has better fundamentals than we do. >> we've got to leave it there. i'm still rooting for the aussie dollar. >> happy new year. our eamon javers has an update in washington. things developing moment by moment. >> they are. and later on in the show, dnc chair howard dean is going to share with us once again that the cliff is the responsible way to go. we'll find out if he's humming the tune because we're going
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over that whether we like it or not. >> and speaking of humming tunes, here's the top downloaded song on itunes this year. any? anyone? anyone? of course. "call me maybe." ♪ i am probably going to the gas station about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and it's not just these owners giving the volt high praise. volt received the j.d. power and associates appeal award two years in a row. ♪
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the fiscal cliff deadline is upon us. it doesn't look like lawmakers in washington will get a deal done by midnight tonight. eamon javers is at the capitol now. where do things stand? >> hey, bill. let me give you an update. right now behind closed doors
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republicans are meeting. we should get a better sense of where their heads are when that breaks up. started about 4:30. then at the top of the hour republicans on the house side are going to have their conference meeting down in the basement here. we'll go downstairs and try to stake sthem out and get a sense of what their reaction is to all of this. meanwhile i wanted to point out to you one interesting notation here. this is the house republican whip floor update. it's been updated. it says members are advised to stay close to the capitol tonight should any additional votes arise. now, presumably that means the potential of a fiscal cliff vote. they want to keep members at least in the physical proximity of the capitol building here on new year's eve tonight just in case they might vote. earlier today we saw a big tone change after the president of the united states came out and talked in front of a group of middle class americans. senator john mccain did not react positively to those comments. take a listen to what john mccain had to say earlier today.
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>> i'm not sure yet as i sort out my impressions of the president's remarks as to whether to be angry or to be saddened. i guess i have to wonder, and i think the american people have to wonder, whether the president really wants this issue resolved or is it to his short-term political benefit for us to go over the cliff? >> so, bill, a lot of raw feelings here on capitol hill. a lot of people frustrated by what's going on and the possibility of being here late on new year's eve. >> indeed. eamon, thanks. if the deal we're hearing about makes it out of the senate, will the house pass it? >> let's ask congressman john yarmuth. i want to ask you point blank. do you think president obama purposely slowed things down today? >> no, i don't think so at all. what i think he was trying to do
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was probably to try to send a signal to the democratic base that this didn't resolve the crisis that things were still in flux. that the spending portion of this dilemma, so-called sequester, is really critical to democrats. because democrats have compromised, given up an awful lot on spending programs that are important to us. if you do away with the sequester, you see what the alternative is. last week it was plan "b." it added money for defense. slashed money for education and food stamps and nutrition programs and medicaid. that is something that's great concern to democrats. >> what are they giving up on spending? >> what are we giving up on spending? well, actually, there's a $1.2 trillion on the table right now under our democrats who say let it go. let the across the board cuts take place. because at least in that case, defense bears a part of the
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burden. and under the sequester, medicaid and some other things are protected. so there's still a $1.047 trillion in spending cuts in the sequester that there are a lot of democrats who are willing to let happen. >> unfortunately we have to leave it there for the moment. lots of things, of course, happening in this hour. but we really do appreciate you joining us today. >> my pleasure. happy new year. you too. howard dean has been on our show many times and he says he wants to go over the fiscal cliff. the former dnc is here and he's going to join us next and tell us what he sees in the situation as it stands. and having an invt like northern trust by your side makes all the difference. we add precision to your portfolio construction by directly matching your assets and your risk preferences against your own unique life goals. we call it goals driven investing. after all, you don't climb a mountain just to sit at the top.
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there are elements of a deal in the works right now, but we know we will be going over the cliff tonight at least technically. some of the gop think remarks from the president earlier today made a deal harder to reach. listen. >> if republicans think that i will finish the job of deficit reduction through spending cuts alone without asking also equivalent sacrifice from millionaires or companies with a
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lot of lobbyists, et cetera, if they think that's going to be the formula how to solve this thing, they've got another thing coming. >> with us now is howard dean, former chairman of the democratic national committee. you have said many times we should go over the cliff. do you think the president's remarks which i think some people interpreted as a my way or the highway kind of statement and obviously laid a delicate state to the process. do you think he basically pushed us over? >> no. i think this is all puffery at capitol hill. these guys have been huffing and puffing for months and will continue to do it. we don't really know what's in this deal yet. i think john yarmuth made a lot of sense. if you take the sequestered cuts out of a deal, this shouldn't be passed. once you take the sequestered cuts left to bring the republicans back to the bargaining table when the debt ceiling comes. so, right now, as i understand is the deal and we don't know what's in the deal, going over the cliff is better than what
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we've got on the table. >> well, we do have -- >> that can be fixed. >> we have details, howard. apparently they've got the income tax level, the estate tax, capital gains tax, phase out deductions for people making over 250. when do we start to see the sequestration of the spending cuts? that really is the sticking point, right? >> i would prefer the republican approach, in that case, if that's what they want. i think -- we want another cliff to occur with the debt ceiling in order to force people to get together as they have today. >> right. >> look, here's the deal. i have never believed that taxing rich people is some sort of a moral imperative. my problem is, and i think the cliff is preferable to what's going on is not enough revenue in this. yeah, sure, you're going to tax people who make a lot of money and we can afford it. i think that's fun. it doesn't raise enough money to
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deal with the e deficit in a serious way. if you have the tax stuff you talked about, plus a significant spending sequester, you can get the spending cuts that you need in order to make a down payment on the deficit. this is really -- this is a political solution more than it is an actual deficit. >> what kind of spending cuts do you think we need? >> a lot of the things that were in the sequester. significant serious defense cuts. and i think we do have to have some cuts on the human service side, which i don't like. but that's what you have to do when you compromise. what has to happen, which nobody is talking about, we have to get medicare under control. i actually don't think the way to control medicare spending is through benefit cuts, i think it's through using managed care for everybody in medicare. that's the only way you're ever going to get ahold of any health care budget. the problem is not medicare, the problem is health care costs for the whole country. >> you wouldn't go along with the idea on medicare to raise
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the eligibility limit to 67 and then to do means testing for those wealthy americans who would qualify and have to pay more? >> that's an exceptionally bad idea. let me tell you why. raising the benefit package to 67 eligibility, from 65 to 67 is just down right dumb and more expensive. it costs you more money because those 65 to 67-year-olds are going to end up on the exchanges for a whole lot more money and it's going to cost the government more. better to have them in medicare where the administration costs are 4% instead of 20%. so, that's really an awful idea. the idea of means testing, it already is means tested. if you want means tested a little bit more, be my guest, but means testing medicare really doesn't save you very much money. that's silliness. and i'm generally against means testing many programs anyway because i think for programs like this, which are really safety net programs, everybody needs to be in them to have the political impetus. and finally, medicare is the only really efficient universal
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health care program that we have in the country. why you want to kick people out of it is beyond me. >> i would really like to ask you, how you feel about being an american, someone who obviously has been in a very prominent leadership position here. we've spoken with many very prominent people, such as yourself, like ed rendell who said, what has been going on in congress right now, going right down to the wire, means that we've become an embarrassment, the nation has become an embarrassment. how do you feel when people say that? >> i actually listened to a really good program on the bbc earlier today, with some americans and indians, lamenting the state of indian democracy and one really smart woman from mumbai got on, said, look, yeah, this is really tough and we're embarrassed, in their case, the horrible rape-murder case. but the truth is, you have middle class people out protesting and demanding something happen for the first time in the short, relatively short 62-year history of indian democracy. we're going through a rough patch and the players aren't
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attractive or doing their job in washington. but the country is functioning. there's a group of young people that are fixing education, fixing all sorts of consumer protections using the internet. attacking banks who victimize their consumers. their own clients. there's a lot of good stuff going on in this country and just -- we are so obsessed with washington, even this talk about fiscal cliff is mostly hooey. the truth is, this isn't a big deal. i heard somebody on this program lamenting how dramatic it is to fall over the cliff, it's not true. it's a slope. >> you think we is can have a good 2013, in terms of growth? >> i think we are. but it sure would be better to give the investment community that we're seriously going to do something about the deficit. >> thanks, howard. happy new year. >> to you guys. >> thank you. what a difference a day makes, right bill? >> yes, indeed. smaller paychecks, higher taxes could be in our futures after midnight tonight. a quick summary of what may and
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will change by going over the cliff is coming up next. ♪
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stocks made some surprising moves. the benchmark s&p a500 up 13.4%. consumer discretion their sector coming in second and the best performing s&p 500 stocks, three of the top five are consumer discretionary names. pulte group up 187%. sprint up $142. whirlpool 114%. and bank of america, up 108%. few market watches predicted that one. but not everyone is a winner this year. utilities are off nearly 5% and energy barely positive for 2012. interestingly, it's a consumer discretionary name that fell the most, apollo group down 61%. advanced micro devices losing 56%. best buy losingrl

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